This is a small estate that will use all funds to pay medical bills and have nothing left for beneficiaries.
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If the estate in question will not have more than $600 in income for next year (which is coincidentally the same dollar amount, $600, as its annual automatic exemption), and you are reasonably sure of that fact, then you may safely mark the Form 1041 as a final-year return.
However, if the estate will have more than $600 in income, and a commensurate amount of lawful deductions for medical expenses, such that it will otherwise have no tax liability . . . then a Form 1041 still will need to be filed, if for informational purposes only. In that case, and if this situation resembles yours, then the tax return in question would not be a final-year return, and should not be denoted as such.
For much more useful information on these topics, in addition to the IRS instructions for Form 1041 itself, you may be interested in reading IRS Publication 559 (Survivors, Executors, and Administrators). A courtesy link that this document is provided below:
https://www.irs.gov/pub/irs-pdf/p559.pdf
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